Service Canada has advised the National Payroll Institute of important Federal Court of Appeal decisions that clarify how the Employment Insurance (EI) Act applies when a business temporarily suspends operations during an annual holiday shutdown period.
The Federal Court of Appeal confirmed that an employee is not considered unemployed during an employer's annual holiday shutdown when all the following conditions are met:
- The employee is on a leave period under an agreement with the employer;
- The employment relationship continues during the leave period; and
- The employee receives vacation pay that was set aside for that period, regardless of when the vacation pay is paid.
The Court also confirmed that while on leave under these circumstances, employers should not issue Records of Employment for the following reasons:
- Employees are deemed to continue holding insurable employment during the temporary suspension of business operation;
- Employees continue to accumulate insurable hours in accordance with Section 10.1(2) of the Employment Insurance Regulations; and
- There is no interruption of earnings under Section 14(6) of the Employment Insurance Regulations.
To ensure compliance with the Federal Court of Appeal's interpretation of the Employment Insurance Act and Regulations, employers should:
- Review and update their practices related to ROE issuance during annual shutdowns, holiday closures, or other temporary suspensions of operations;
- Refrain from issuing an ROE solely at an employee's request during qualifying shutdown periods; and
- Inform their employees of these changes and direct them to contact Service Canada with questions about their individual circumstances.
Additional Resources